NewRiver REIT’s joint venture with Pimco’s Bravo Strategies III has exchanged contracts to buy Aberdeen Standard Investments’ The Moor shopping centre in Sheffield, for £41m.
ASI has been in talks to sell The Moor to the jv since late 2019. At the time, it was on the market for £89.4m.
The pricing reflects a net initial yield of 9.1%, which is expected to rise to 9.8% after a “number of leasing deals”, with an equivalent yield of 11.3% and a 14.6% reversionary yield.
The deal for the estate, which provides 680,000 sq ft of retail and leisure space anchored by Next, Sainsbury’s, and an occupier-owned Primark, represents a capital value of £60 per sq ft. The retail and leisure area has an average rent of £13.90 per sq ft.
The Moor also has a nine-screen cinema and houses a covered marketplace owned by Sheffield City Council.
NewRiver said the shopping centre comprises 15 assets that can be sold off separately. It has identified the potential to develop up to 1,100 build-to-rent residential flats and up to 300 purpose-built student accommodation spaces at the location.
It will hold a 10% stake in the asset worth £4.1m.
Allan Lockhart, chief executive of NewRiver, said: “The acquisition of The Moor with our joint venture partner Bravo represents a rare opportunity to acquire a 28-acre estate in one of the UK’s largest and fastest-growing cities, at a very attractive price which is far below the break-up value of the site.
“This acquisition will generate very attractive returns for NewRiver, driven by sustainable rental income and capital growth through the redevelopment of parts of the estate, principally for residential uses.”
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